A review of things you need to know before you go home on Wednesday; a TD rate rise, Govt tax surplus leaps, wholesale trade strong, residential building weak, rates up, AU GDP underwhelms, swaps unchanged, NZD rises

Here are the key things you need to know before you leave work today:

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
Kookmin Bank lowered its term deposit rates for terms to 3 months, and raised them for terms six months and more.

CROWN A/CS SHOW SOME REMARKABLE CHANGE
The January edition of the Crown Accounts, a seven month set, shows fast-swelling surpluses. The tax take gains have pushed the seven month OBEGAL surplus to $2.4 bln, which is a remarkable +$1.4 bln more than just 31 days earlier. The full operating balance was $6.5 bln, an even more remarkable +$3.0 bln rise in 31 days (and the third highest monthly gain ever). But a closer inspection of the tax-take flows may indicate trouble looming. The tax collected from individuals is up +7.0% in the seven months to January compared to the same period a year ago. That is a +$1.3 bln gain. Tax on individuals is a lagging indicator. But tax on business profits is going the other way, down -$0.1 bln on the same basis. That contrasts with a +$0.8 bln rise in the previous year, so it has been almost a -$1 bln shift. Taxes on business income is a leading indicator.

BOOMING
The latest wholesale trade data out today was also impressive. It was was $27.9 bln in the December 2017 quarter, up +$2.2 bln or +8.4% from the December 2016 quarter. That is the fastest rise in six years. Rising demand for rural inputs drove the increase. The machinery and equipment sector was also strong. (But history shows that when growth exceeds +7.5% pa, it falls quickly thereafter - usually. Just saying.)

TOUGH ECONOMIC REALITIES
One sector that is no longer showing much growth is the building sector. Year-on-year building work completed is up a minor +5.5% and far below the +21% increase we recorded in the December 2016 quarter. All this weakness is due to the residential sub-sector - the non-residential sub-sector is expanding fast (and probably starving the residential sub-sector of people and resources). This will make the building af any 'affordable homes', including the Government's, a massive challenge.

IN THEIR OWN WORLD
The growth in local authority income continues at more than twice the rate of inflation. It has only grown at a rate that matches inflation in one quarter over the past 15 years.

AUCKLAND COUNCIL EYES GREEN BONDS
Auckland Council wants to be the first NZ council to establish a Green Bond framework and to consider the issue of NZ dollar Green Bonds later this year as it looks to "significantly invest" in infrastructure aimed at lowering emissions and adapting to climate change.

LESS THAN EXPECTED
The Australian economy grew by less than expected in the December quarter, up just +2.4% pa with export weakness offsetting stronger consumer spending. This was below expectations of +2.5%. (New Zealand's GDP data will not be released until Thursday, March 15. The last time ours wads reported, growth was +2.7%. This time the expectation is +2.8%.

BENCHMARK INTEREST RATES MIXED
Wholesale swap rates are unchanged today. The UST 10yr is down to 2.86% today (-3 bps) erasing most of yesterday's gains. The Aussie Govt 10 yr is up +3 bps to 2.80%. The China 10 yr is also up by +2 bps to 3.88% while the NZ Govt 10 yr is up another +1 bp today to 3.04%. The 90 day bank bill rate is unchanged at 1.90%.

BITCOIN OFF
The bitcoin price is now at US$10,871 or -3.4% lower than this time on yesterday.

NZ DOLLAR FIRM
The Kiwi dollar is up +½c today although all of that rise occurred overnight. There has been little movement in local trading so far today. It is now at 72.8 USc. We are at 93.5 AUc and at 58.6 euro cents. That puts the TWI-5 up at 73.7.

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